thursday, october 18, 2018 cliftonlarsonallen · •2% of medicare ffs reimbursement (estimated...
TRANSCRIPT
©2018
CliftonLarsonA
llen LLPLong Term Care Finance Association
Thursday, October 18, 2018
Surviving Senior Care: Key Revenue Issues and Changing Markets
For Skilled Nursing, Assisted Living and Home Care
©2018
CliftonLarsonA
llen LLP
Index
• Senior Living Trends – Demographics• Medicare Beneficiaries – Medicare Advantage Enrollment
• Home Health, Hospice, Physicians, SNFs, Retirement Communities (ALFs, CCRCs)
2
©2018
CliftonLarsonA
llen LLP
3
©2018
CliftonLarsonA
llen LLP
Demographic Growth: Senior Cohort
4
©2018
CliftonLarsonA
llen LLPHow well do you understand the
demographics of your local market?
5
©2018
CliftonLarsonA
llen LLP
• Do you have plans to expand beyond your bricks and mortar?
• How can you develop services that help individuals age independently at home?
6
©2018
CliftonLarsonA
llen LLP
• https://www.claconnect.com/resources/white‐papers/2018/‐/media/files/white‐papers/2018‐senior‐living‐trends‐white‐paper‐cliftonlarsonallen‐llp.pdf
7
©2018
CliftonLarsonA
llen LLP
The complexity and pace of change
will bring opportunities to some
providers and pose significant
threats to others.
8
©2018
CliftonLarsonA
llen LLP
Where are the Post Acute Discharges Going and Why Do Our Costs Vary?
9
©2018
CliftonLarsonA
llen LLP
• Medicare FFS Q1 2018• Almost 50% of all hospital discharges are sent home
with no post acute care instructions
10
©2018
CliftonLarsonA
llen LLP
Post‐Acute Utilization is CMS’ Greatest Opportunity!
Source: Newhouse JP, et al., Variation in Health Care Spending. Institute of Medicine of the National Academies, 2013; Gottlieb DJ, et al., “Prices Don’t Drive Regional Medicare Spending Variations,” Health Affairs, 29, no. 3 (2010): 537‐543; Health Care Advisory Board interviews and analysis.
11
©2018
CliftonLarsonA
llen LLP
The Growing Number of Medicare Beneficiaries
The Varying Medicare Advantage Markets
What Does the New England and National Markets Look Like?
12
©2018
CliftonLarsonA
llen LLP
• 35% of seniors are enrolled in Medicare Advantage and rapidly growing
13
©2018
CliftonLarsonA
llen LLP
14
• Rapidly growing states: ME, VT, NH,
©2018
CliftonLarsonA
llen LLP
15
Q1 2018 Q1 18 vs Q1 17 Q1 18 Per Capita Per Capita Growth Medicare Advantage National 58,050,063 2.1% 0.177 1.6% 36%
MA 1,298,987 2.0% 0.189 0.4% 24%CT 663,269 1.7% 0.185 0.3% 35%ME 327,076 2.0% 0.245 0.6% 31%NH 289,334 2.5% 0.215 0.7% 13%RI 213,489 1.6% 0.201 0.4% 44%VT 142,289 2.6% 0.228 0.6% 10%
Total Medicare Beneficiaries National and New England States
©2018
CliftonLarsonA
llen LLP
Medicare Advantage Enrollment as a Percentage of Total Medicare Beneficiaries
16
Source: Kaiser Family Foundation, Q1 2018
©2018
CliftonLarsonA
llen LLP
Medicare Advantage ‐ Implications
Reduced length of stay
Reduced reimbursement
Increased oversight and
scrutiny
Complicated revenue cycle
17
©2018
CliftonLarsonA
llen LLP
Hospice‐ Admissions‐ Growth‐ Length of Stay
18
©2018
CliftonLarsonA
llen LLP
19
©2018
CliftonLarsonA
llen LLPHospice Admission Growth
Q1 2018 vs Q1 2017
20
Source: Kaiser Family Foundation, Q1 2018
©2018
CliftonLarsonA
llen LLP
• Rolling 2 year weighted ALOS
21
©2018
CliftonLarsonA
llen LLP
Home Health ‐ Admissions‐ Growth‐ Physician Practice Responses
22
©2018
CliftonLarsonA
llen LLP
23
©2018
CliftonLarsonA
llen LLPHome Health Admissions Growth
Q4 2017
24
Source: Kaiser Family Foundation, Q1 2018
©2018
CliftonLarsonA
llen LLPTrends in Senior Living –
Home Health Impact• Expansion of Medicare Advantage plans to include non‐skilled in home care
• Increased clinical competency• Chronic Condition Special Needs Plan (C‐SNP)
• Risk of Federal regulatory oversight• Rehab in an ALF setting
25
©2018
CliftonLarsonA
llen LLPPhysician Practice Responses Relevant
to Home Health and Hospice
1. New payment models are pushing providers to act differently and refer differently
2. The demographics of individual physicians, and the make‐up of physician practices is dramatically changing
3. The “power of the pen” can be influenced by home health and hospice in new and unique ways
4. Determine how to engage with key physician referrals or risk irrelevance – there will be winners and losers
26
©2018
CliftonLarsonA
llen LLP
Skilled Nursing‐ Competitive Landscape‐ Patient Driven Payment Model (PDPM)‐ Institutional Special Needs Plan (ISNP)‐ Value Based Purchasing
27
©2018
CliftonLarsonA
llen LLP
SNF & LTC IndustryCompetitive Landscape• The demand for long‐term care services is strong due to
rapidly aging populations. • Profitability of individual nursing facilities depends heavily
on efficient operations, as revenue per patient is largely controlled by government insurance programs such as Medicare and Medicaid.
• Much of the industry is struggling with low reimbursements and the shift toward non‐institutional care.
• Larger companies have some economies of scale in administration and purchasing, but small operators can compete effectively by offering better service.
28
©2018
CliftonLarsonA
llen LLP
Skilled Nursing Facilities
29
Source: MedPAC
©2018
CliftonLarsonA
llen LLP
What is PDPM?
• PDPM removes the use of therapy minutes to assess residents for a reimbursement level.
• PDPM is based on clinical and diagnosis information rather than amount of service needed.
• Creates a separate payment component for NTA services, using resident characteristics to predict utilization.
• Enhances payment accuracy based on clinical aspects of care.
30
©2018
CliftonLarsonA
llen LLPPDPM
Big Change – Variable Payments
• PDPM will result in higher rates at the beginning of a stay and lower rates at the end of a stay.
• CMS determined constant per diem rates do not accurately reflect medical needs and resources used.
• PT+OT reimbursements will initially increase compared to the RUG rates. However, the PT+OT rates will decline steadily starting after the 20th day at 2% for every 7 days.
• NTA reimbursements will decrease after the 3rd day from a case mix index of 3 down to 1.
31
©2018
CliftonLarsonA
llen LLP
PDPM – Provider Example
32
Source: CLA RUG to PDPM Calculator
©2018
CliftonLarsonA
llen LLP
PDPM – Provider Example
33
Source: CLA RUG to PDPM Calculator
©2018
CliftonLarsonA
llen LLP
Institutional Special Needs Plan (ISNP)• Provider becomes the Medicare Advantage Plan• Currently only 4% of Medicare population is enrolled
in an ISNP– 2.4 million beneficiaries
• Enrollment has quadrupled over the last decade• PMPM rate to cover all Medicare expenditures
– Inpatient stays– Outpatient therapies/procedures
34
©2018
CliftonLarsonA
llen LLP
Skilled Nursing:
Financial Challenges
35
©2018
CliftonLarsonA
llen LLP
Diminishing Financial Results
36
©2018
CliftonLarsonA
llen LLP
Where are the Medicare Days Going?
Changes in hospital discharge patterns from 2013 ‐ 2016• Reduction in
SNF and LTAC is not resulting in a HHA increase
Source: The Advisory Board
37
©2018
CliftonLarsonA
llen LLP
Indirect Downstream Incentives
• Hospital discharges and physician referrals will go to high quality PAC providers– Hospital readmission reduction program (HRRP) – MACRA
• Cost‐focused payment reform programs require different behaviors– PAC utilization management for entire
populations– BPCI/CJR incentivize reduced PAC utilization for
certain episodes Source: Advisory Board
38
©2018
CliftonLarsonA
llen LLP
Align With a Variety of Partners
Source: Advisory Board
Physician groups Hospitals SNFs ALFs
39
©2018
CliftonLarsonA
llen LLP
Value Based Purchasing – The Basics
40
Withhold• 2% of Medicare FFS reimbursement (Estimated $527.4M)• ~60% redistributed to top performers, 40% retained by CMS
• Bottom 40% of performers lose entire 2% withhold
Measure• 30 day all‐cause, risk‐adjusted, unplanned hospital readmission rate
©2018
CliftonLarsonA
llen LLP
Value Based Purchasing – Case Study
• 111 bed SNF• 90% occupancy• 20% Medicare FFS• $500/day Medicare Rate
Assumptions
41
$3,650,000 Medicare revenue
X 2% Withhold
$73,000 Impact
©2018
CliftonLarsonA
llen LLP
Value Based Purchasing – Case Study
42
Facility
Annual Medicare Revenue
Baseline Period: CY 2015
RSRR %
Estimed 60th
percentile
Above/Below 60th
percentile
Minimum at risk
reimbursement1 2,646,413$ 18.204 19.322 Below 52,928.26$ 2 3,612,021 17.470 19.322 Below 72,2403 2,038,495 19.455 19.322 ABOVE 04 4,684,551 21.457 19.322 ABOVE 05 1,500,476 17.705 19.322 Below 30,0106 1,031,373 16.366 19.322 Below 20,6277 1,594,192 18.615 19.322 Below 31,8848 1,429,792 17.328 19.322 Below 28,5969 2,007,686 20.772 19.322 ABOVE 0
10 2,529,704 17.317 19.322 Below 50,59411 1,269,420 16.817 19.322 Below 25,38812 1,761,820 19.705 19.322 ABOVE 013 519,295 18.860 19.322 Below 10,38614 1,753,074 17.480 19.322 Below 35,06115 875,285 17.647 19.322 Below 17,506
29,253,597$ 375,221$ x .02
585,071.94$
Summary‐ 15 SNFs‐ $29.3M Medicare revenues‐ $585k at risk (2% of $29.3M)‐ 11 SNFs below 60thpercentile‐ $375k reduction unless sizeable quality improvement in 11 SNFs
©2018
CliftonLarsonA
llen LLP
Strategies for Success in a Value Based Ecosystem
43
Alternative Payment Model experience
Clinical competency
during SNF stay
Post‐discharge excellence
Identification of high risk residents
Quality measurement
data
©2018
CliftonLarsonA
llen LLP
Surge in Private Equity Investment
Source: The Advisory Board
44
©2018
CliftonLarsonA
llen LLP
Retirement Communities‐ Assisted Living‐ Continuing Care Retirement Communities (CCRCs
45
©2018
CliftonLarsonA
llen LLPRetirement Communities
About the Industry• Independent retirement communities consist of single‐family homes, townhouses,
condominiums or duplexes in which residents live on their own.• CCRCs provide independent housing arrangements or assisted living facilities,
along with health care services that increase in scope as residents' needs change.The Market• Retirement communities are expected to increase due to the 77 million Americans
in the baby boomer demographic ‐‐ those born between 1946 and 1964.Trends• The trend to move to communities in warm‐weather states continues, although
people are moving to less‐popular states, such as Georgia and Tennessee ‐‐ instead of Florida and Arizona ‐‐ to keep costs down.
Challenges• Retirement communities must find ways to appeal to buyers who want an upscale
environment and improved services. In addition, more health‐conscious baby boomers want to live near golf courses, bodies of water or in walkable communities to stay physically fit. Retirees also want to bring their pets with them.
46
©2018
CliftonLarsonA
llen LLP
47
twitter.com/CLAconnect
facebook.com/cliftonlarsonallen
linkedin.com/company/cliftonlarsonallen
©2018
CliftonLarsonA
llen LLP
CLAconnect.com
youtube.com/CliftonLarsonAllen
Richard J. Hamilton, CNHA, RPh., [email protected]‐984‐8142